from the estate of a railroad magnate.
Harvard's library was built in memory of a young man
who went down on the Titantic.
From the New York Times.
Harvard has said its overall endowment portfolio declined 22 percent from July through October and that it could end the fiscal year in June down 30 percent. That performance is in line with the average for university endowments, though some have done better. Yale’s endowment was off 13.4 percent in the comparable four-month period, while Princeton’s was down 11 percent, and both have projected a total 25 percent drop for the fiscal year.
Harvard borrowed money to invest, increasing their returns but also their losses - so they got burned too. They are selling off their liquid assets to make ends meet. That is part of the stock market meltdown, because many institutions are doing the same.
Bank of America and Citibank are both facing insolvency. I believe they each have about $2 trillion in assets. Obamessiah is now talking about nationalizing the banks "for a short time."
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CNBC
Several Goldman Sachs partners have leveraged their Goldman Sachs stock to buy alternative investments such as hedge funds & private equity, and they have done so through their Goldman Sachs brokerage accounts.
But Goldman stock has declined in value by more than 50 percent since last spring, meaning that Goldman Sachs is in the awkward position of making margin calls on its own partners, who can't meet those calls because their alternative investments are underwater and they don't have enough cash on hand.
Ben Stein thought they were giving away Goldman Sachs stock when it was priced much higher. The Goldman Sachs partners, as rich as they were, borrowed against their own stock to buy speculative investments, which are plummeting in value along with the GS stock. This is another source of stock price meltdown. The most liquid assets are sold first.
After the 2006 elections, liar loans to illegals and speculators went through the roof, sending home prices into the stratosphere (credit bubble). Rating agencies collected huge fees to rate the equities based on these mortgage bundles, listing most of them as AAA or the equivalent. Credit default swaps (insurance on debt) were sold all over the world because they were also rated highly by Moody's and other rating businesses.
It is known that there was an organized run on the credit market in September of 2008. About $500 billion was withdrawn from money market accounts in one hour. A few are making big money from bear runs on financials, selling stock first (selling short) and buying it later when they have pounded the price down.
Some old frauds are exploding, like ammo cooking off in a fire, because the meltdown exposed various Ponzi schemes. Madoff is the biggest, with $50 billion looted. Another one just broke - $8 billion. A third one involved only about $600 million, so no one notices that story. The third one was exposed because one employee asked a few key questions of the fraudster. Police were summoned. Each Ponzi scheme adds to the meltdown because people lived as though they had real money when it was all gone.
Additional detonations will be heard as equities based on credit card debt sink in value. Oh yes, they bundle up credit card debt and sell it as an investment. When people refuse to pay their credit cards or cannot, the equities based on the debt turn to garlic.
Las Vegas casinos have been left half-completed. When vice goes begging for cash, things are bad.
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Bruce Church has left a new comment on your post "Ivy League Losses":
Rush Limbaugh speculated that hedge funds and money markets withdrew that $500 billion in one day in order to make the Republicans look bad and get Obama elected, but I'd say it's much more likely that someone figured out that the whole US economy had become hallowed (sic) out so it was a house of cards waiting for a gust a wind to come along.
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GJ - I am not a financial expert. The proof is that I have not bankrupted any large banks or made any hedge funds insolvent. I think several scenarios are possible. One is definitely the election spin. Perhaps the scheme got out of hand, since all banking runs on trust. If I had to pay every bill I owe tomorrow, I would be flat busted too. Some think a few billionaires like George Soros wanted Obamessiah in power and colluded to make fortunes with naked bear runs on various institutions. A second alternative is that China pulled a lot of cash at once to destabilize America, but that got out of hand because we decided to stop buying so much cheap Chinese junk. Millions of Chinese are out of work and very restless. A few years ago, one financial magazine noted that young Chinese people stay heavily in debt (compared to wages) for the latest fads. In other words, they can afford a recession even less than we can.
Bruce Church is right about debt being a house of cards ready to fall. Consumer debt kept zooming, and houses were used to fuel that. Pay off Discover with an equity loan, build another debt, pay with a re-fi, etc.
